Cost of debt refers to the cost of financing a company using debt such as a bond issue or bank loan. It is stated as an interest rat rD. Since there is a tax shield on the interest component of debt, the component used in WACC is rD (1 –t) In this article, we will estimate ...
In calculating the weighted average cost of capital (WACC), which of the following statements is least likely correct? A. The cost of preferred equity capital is the preferred dividend divided by the price of preferred shares. B. The cost of debt is equal to one minus the marginal tax ...
When calculating the weighted average cost of capital (WACC) an adjustment is made for taxes because :() A. equity is risky. B. preferred stock is used. C. the interest on debt is tax deductible. 相关知识点: 试题来源: 解析 C Equity and preferred stock are not adjusted for taxes bec...
In calculating the weighted average cost of capital (WACC), which of the following statements is least accurate ? A. Different methods for estimating the cost of common equity might produce different results. B. The cost of preferred equity capital is the preferred dividend divided by the price...
When calculating the weighted average cost of capital (WACC) an adjustment is made for taxes because: A. equity earns higher return than debt.B. the interest on debt is tax deductible.C. equity is risky. 正确答案:B 分享到: 答案解析: Equity and preferred stock are not adjusted for taxes...
WACC = (E/V x Re) + (D/V x Rd x (1 – Tc)) Variables Affecting the WACC Formula Capital structure:The proportion of debt and equity financing used to fund a company’s operations influence the weighting of their respective cost of capital in the WACC formula. ...
In calculating the weighted average cost of capital (WACC), which of the following statements is least likely correct()A.The cost of preferred equity capital is the preferred dividend divided by the price of preferred shares.B.The cost of debt is equal
Suppose the most recent dividend was $4.10and the dividend growth rate is4.1percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. The tax rate is22percent. What is th...
estimating WACC for U.S. firms, General Electric and Microsoft; Significance of good judgment and sensitivity analysis to estimate a firm's cost of capital for applications in accounting and finance; Reason for using market values rather than book values in determining the weights of debt and ...
To calculate WACC, take the weight of the financing source and multiply it by the corresponding cost. However, there is one exception: Multiply the debt portion by one minus the tax rate, then add the totals. The equation is: WACC=Wd[kd(1−t)]+Wps(kps)+Wce(kce)where:WACC=Weighted ...